Aramco halted loadings at Yanbu on the Red Sea after drones shut the East-West pipeline — leaving the world's largest exporter days of stored crude and no safe route out, and driving supertanker hire past $1 million a day for the first time.
The world's largest oil exporter may have shipped no crude for three days. Saudi Aramco suspended loadings at Yanbu — the Red Sea terminal that had become its last wartime outlet — after drone strikes launched from Iraq shut the 1,200-kilometre East-West pipeline on Friday, Sept. 11. Ship-tracking firm Vortexa said satellite observation showed no Saudi cargo leaving a Red Sea port since Saturday. Reuters reported buyers were told some September-loading cargoes are cancelled, and Argus Media reported every Saudi cargo scheduled for the final ten days of September could be at risk — a disruption traders now see running into October.
Why there is no route left. The pipeline carried about 4 million barrels a day — roughly 4% of world supply — around the Strait of Hormuz, closed to normal traffic since the war began Feb. 28. The Houthi blockade declared in July had already driven Saudi shipments through Bab el-Mandeb toward zero. Yanbu was the last door. Saudi production last month fell to its lowest since 1990, and the terminal holds about 22 million barrels — four to five days of exports at full rate.
The damage. Vantor satellite images show the al-Mesabaah pumping station charred. Estimates given to Reuters range from partial resumption during repairs to six weeks offline; two officials told the Associated Press the pipeline will be mostly out of service for weeks.
The price of what still moves. Some crude still leaves the Gulf dark — transponders off, ship-to-ship transfers — at about half its pre-war volume. Chartering a supertanker on the Gulf-to-China run now costs $1.035 million a day, the first time the benchmark has crossed $1 million (Baltic Exchange, Sept. 14); before the war, on Feb. 20, it cost $157,000 — and that was already a record February. Freight is now about a quarter of the delivered price of that crude. It was roughly 5% before the war.
What it means. The IEA already counts this as the largest oil-supply disruption on record — March's loss of 10.1 million barrels a day was nearly double the Iranian Revolution's and more than twice the 1973 embargo's 4.5 million. Yanbu closing deepens it again: Brent settled at $108 Tuesday, some physical cargoes in Europe cleared $130, and U.S. diesel passed $6 a gallon on Friday, a record. The Federal Reserve is expected to raise rates Wednesday into that inflation.
Catch up
- Feb. 28 — The U.S. and Israel attacked Iran; Iran shut the Strait of Hormuz to normal shipping, closing a route that carried about a fifth of the world's oil.
- July — The Houthis declared a maritime blockade of Saudi Arabia; shipments through Bab el-Mandeb neared zero by August. Yanbu became the main outlet, its loadings quintupling to nearly 4 million barrels a day.
- Sept. 11 — Drones launched from Iraq hit the East-West pipeline; Riyadh shut it, blamed Iraqi militias, and said it would not retaliate for now.
- Sept. 13 — Satellite images showed the burned al-Mesabaah station; Houthi forces captured Perim island in the Bab el-Mandeb strait.
- Sept. 14 — Supertanker hire on the Gulf-to-China route topped $1 million a day for the first time.
- Sept. 15 — Aramco suspended Yanbu loadings; European refiners learned late-September cargoes are cancelled.
5 earlier issues
- Houthi missiles and drones hit 4 Saudi cities, wounding 73 and halting Aramco's 400,000-barrel-a-day Jazan refinery
- Houthis capture Yemen's Mokha from Saudi-backed forces 46 miles from Bab el-Mandeb
- UpdateHouthi forces captured Mokha and Perim island in the 28-kilometer Bab el-Mandeb strait.
- UpdateA day after the Bab el-Mandeb capture, maritime monitors have recorded no new transit halts
- UpdateSaudi Arabia shuts Hormuz-bypass pipeline, oil rises more than $3 with 4% of supply at risk
Why a pipeline outage can idle the world's largest exporter
- Chokepoint arithmetic: about 20% of world oil transited Hormuz before the war; the pipeline was Saudi Arabia's only real bypass, and Bab el-Mandeb is the only sea lane out of Yanbu.
- No spare capacity to call: the states that normally backstop a shock — Saudi Arabia and the UAE — are the ones cut off this time.
- Shipping eats itself: every tanker rerouted around Africa disappears for 30 extra days, shrinking the working fleet — one reason hire rates hit $1 million a day.
- Emergency cover is thin: coordinated stock releases equal roughly 20 days of normal Hormuz flow.